European biodiesel industry welcomes antisubsidy investigation

By The European Biodiesel Board | January 31, 2018

Following a complaint lodged by the European Biodiesel Board, the EU Commission initiated an antisubsidy investigation Jan. 31 targeted at heavily subsidized Argentinean biodiesel exports. After the downward revision in September 2017 of antidumping duties on imports of biodiesel from Argentina, protective measures against subsidized Argentinean exports are needed with urgency.

The EBB took the decision to lodge the case after the commission, following a recent World Trade Organization appellate body’s ruling, lowered the duties on Argentinean biodiesel imports through Regulation 2017/1578 on Sept. 18. The revised levels of duties are clearly insufficient against the massive imports of unfairly traded Argentinean biodiesel, already resulting in severe damage to EU industries. Multiple sources, including the Argentinean association of biodiesel producers, CARBIO, confirmed that over 600,000 metric tons of Argentinian soy methyl esters (SME) have already been exported to the EU since the end of September. Massive Argentinean unfair exports that have been blocked by U.S. antisubsidy duties in September have been diverted in an enhanced flood to the EU, which makes the situation even more critical.

The notice of initiation of the antisubsidy case, published Jan. 31 in the EU Official Journal, represents a positive step for the EU biodiesel industry, but EU trade defense measures are needed urgently.

“The EU producers are facing a massive surge in subsidized biodiesel exports from Argentina, that may bring overall imports from Argentina well beyond 2.5 million tons this year,” said Raffaello Garofalo, secretary general of the EBB. “This would be unacceptable. We are simply unable to compete with the heavily subsidized, cheap Argentinean product, which is often sold at a price below biodiesel’s raw materials. We are witnessing a worsening of the déjà-vu—i.e. of the flooding of the EU biodiesel market with underpriced Argentinean SME that happened five years ago and soon in 2018 we may face the same situation also from Indonesia.”

Argentina and Indonesia apply a tax on exports of the raw materials (soybean and palm oil), which largely exceeds the tax on exports of final processed biodiesel, discouraging exports of raw materials in favor of exports of biodiesel. This allows the domestic biodiesel industry to benefit from raw materials at significantly and artificially reduced prices, reducing its costs of production and conferring its domestic industries of biodiesel with a substantial advantage in relation to their competitors abroad.

Following a legal complaint lodged by EBB in 2012, the definitive antidumping measures against unfair biodiesel imports from Argentina and Indonesia have been imposed for a period of five years via EU Regulation 1194/2013, published on Nov. 26, 2013.

Argentina lodged a complaint at the WTO in December 2013. Following the WTO appellate body’s report that was published in October 2016, the European Commission had been given until Aug. 10, 2017, to ensure the EU duties conform with the WTO appellate body’s report. The EU and Argentina mutually agreed to postpone the deadline to Sept. 28, 2017. The EU decided to lower substantially the antidumping duties against Argentina, in order to conform to the WTO appellate body’s decision. This decision by the EU Commission came into force in September.

In June 2014, the Indonesian government lodged a similar complaint at WTO. The WTO panel report in the EU-Indonesia biodiesel dispute was just published Jan. 25.